Given the long-term growth prospects of the Indian economy and the increasing adoption of financial products, AMCs (asset management company stocks such as HDFC AMC, Nippon and UTI) could offer solid investment opportunities, said Kunal Jain, Senior Consultant and Partner at Alpha Capital in an interview to Moneycontrol.
He believes the outlook for Indian OMCs (oil marketing companies) is cautiously optimistic in the short to medium term, supported by strong domestic demand for petroleum products and stable refining margins.
For the equity markets going ahead, US Federal Reserve's meeting on September 17-18; Reserve Bank of India (RBI) monetary policy meeting on October 4; US Presidential Election result on November 5; assembly election results in India; and corporate earnings data of coming quarters will be key drivers, according to Kunal Jain, who has more than 10 years of experience in investment management and client management.
Do you see good opportunity investment in the AMC space?
In India, there are three major asset management companies (AMCs) listed on the stock exchanges, namely, HDFC AMC (current P/E at 45.91), Nippon India AMC (P/E at 35.61) and UTI AMC (P/E at 18.12). These companies have strong brand recognition, a wide distribution network, and robust product offerings.
The Securities and Exchange Board of India (SEBI) has been actively regulating the industry to ensure transparency, protect investors, and maintain market integrity. Investing in the AMC space in India could be a good long-term opportunity, especially if you are bullish on the financial sector's growth.
Given the long-term growth prospects of the Indian economy and the increasing adoption of financial products, AMCs could offer solid investment opportunities.
Your take on the oil marketing companies?
The outlook for Indian OMCs is cautiously optimistic in the short to medium term, supported by strong domestic demand for petroleum products and stable refining margins.
In India, there are three major oil marketing Companies (OMCs) listed on the stock exchanges, namely, IOC (current P/E at 8.01), BPCL (P/E at 7.95) and HPCL (P/E at 8.90).
India’s demand for petroleum products, especially petrol and diesel, remains strong due to its growing population, increasing vehicle ownership, and economic growth. This supports a stable revenue stream for OMCs.
These are heavily impacted by fluctuations in global crude oil prices, as they import a significant portion of their crude requirements. The global and domestic shift towards cleaner energy sources poses a long-term challenge for OMCs. Investments in renewable energy, electric vehicle (EV) infrastructure, and alternative fuels are critical for OMCs to stay relevant. As electric vehicle adoption grows, the demand for traditional fuels may gradually decline.
OMCs are investing in refinery upgrades, expansion of retail networks, and diversification into petrochemicals and renewable energy. These investments are crucial for sustaining long-term growth.
What is the next key driver for the Indian equity market?
US Federal Reserve's meeting on September 17-18, Reserve Bank of India (RBI) monetary policy meeting on October 4, US Presidential Election result on November 5, assembly election results in India and corporate earnings data of coming quarters will be key drivers.
Do you see the chance of 50 bps cut in fed funds rate from the US Federal Reserve in the rest of calendar year?
The Federal Reserve closely monitors economic indicators such as inflation, employment, and GDP growth. A significant slowdown in economic activity or a notable decline in inflation could make a larger rate cut more plausible.
Will the RBI follow the same path?
The RBI’s primary focus is on the Indian economy. If the US rate cut influences global economic conditions, it could indirectly affect India. However, the RBI will primarily base its decisions on domestic factors such as inflation, growth, and currency stability.
If a Fed rate cut leads to improved global economic conditions or reduced borrowing costs for India, the RBI might consider adjusting rates to support economic growth or stimulate investment.
Do you see more than 15 percent return from the largecap banking names?
In Last one year, HDFC Bank has just delivered 3.86 percent return while Sensex has delivered 26 percent return. Similarly, Kotak Mahindra Bank (-0.73 percent), Axis Bank (18.7 percent) and ICICI Bank (25.9 percent) in last one year. The trajectory of interest rates set by the Reserve Bank of India (RBI) can significantly impact bank profitability and stock returns.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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